Ninth Inning Investments -

What A Wild Week!

George MahfouzAugust 1, 20263 min read

What a wild week it was for the stock market and currency markets. From earnings reporting season kicking into high gear, to the Federal Reserve keeping interest rates steady, to the on again off again war, and to the dollar/yen carry trade, the market swings last week were wild.

The Dow Jones Industrial Average (see chart here) closed the week up at 52,485 while crossing back over its 20-day moving average (M/A). The S&P 500 (see chart here) closed the week at 7,490 which is right at its 20-day M/A. The Nasdaq Composite (see chart here) also closed the month of July in the green closing at 25,373, however, the small-cap Russell 2000 (see chart here) closed the month out in the red at 2,931 while also closing below its 20-day and 50-day M/A. The VIX (see chart here) was also bouncing around this week but closed on the low end of its weekly range. The VIX measures the implied volatility of the S&P 500 and is also known as the “fear index”. When the VIX spikes which it did this week it’s an indication of increased fear and risk in the market.

What’s causing all of this volatility and fear sentiment? As mentioned above, earnings reporting season has kicked into high gear with companies reporting a mixed bag of results. Also, the highly anticipated Federal Reserve meeting was held on Wednesday where the new Fed Chairman Kevin Warsh came to the podium and kept interest rates steady. When that news hit, stocks sold off along with expectations of any rate cuts this year. Finally, the dollar/yen carry trade came into focus and this one is the big one folks.

Basically the dollar/yen carry trade is when hedge funds and/or institutional investors borrow money in yen denominated currency while interest rates have remained low in Japan. You then covert those yen into U.S. dollars, then you invest those dollars into higher-return assets such as U.S. stocks, treasury bonds etc. hence, you profit from the spread. The problem lately is the yen has strengthened against the U.S. dollar and now your loan has come much more expensive in dollar terms. When this occurs these hedge funds and institutional investors respond by selling U.S. based assets to reduce their exposure. In addition to the Japanese yen getting stronger, the central bank of Japan is also considering raising interest rates and should that occur, the yen gets even stronger. Efforts are being made to stabilize the dollar/yen carry trade by both the Japanese and U.S. governments, let’s see if this trade stabilizes next week.

Good luck to all 🙂

~George

Market Commentary

Was That Window Dressing?

George MahfouzJuly 1, 20262 min read

Was that window dressing that lifted stocks to close out the quarter? I wanted to share some thoughts on whether today’s market strength was the result of ” window dressing.” Window dressing occurs when fund managers or companies artificially inflate stock prices to strengthen their balance sheets and/or stock price, particularly as a quarter comes to an end. This practice is often driven by performance-based bonuses; managers aim for the highest possible closing price to maximize their measured quarterly results. When stocks rally in the final days of a quarter, it is frequently a result of managers squeezing additional performance out of their portfolios rather than a sudden surge in sales or fundamental strength of a given company. While this isn’t always the case, it is a common practice to keep in mind.

The stock market continues to be on a tear. The Dow Jones Industrial Average (see chart here) closed the quarter up 136 points at 52,319. The S&P 500 (see chart here) closed up 59 points at 7,499. The Nasdaq Composite (see chart here) closed the month and quarter up 393 points at 26,213. Finally, the small-cap Russell 2000 (see chart here) closed up 13 to close at 3,024. This week we also saw the Dow Jones Industrial Average (chart) hit an all-time high of 52,655.

Now comes the real test. With the second quarter concluded, I think the upcoming earnings season will be a critical test for these record price levels. The bar is set high; if companies miss expectations or provide conservative guidance, we could see significant pullbacks. I am particularly watching AI-related stocks, where underperformance could lead to 10-20% corrections or even more. Even with strong results, much of the growth may already be priced in. This earnings reporting season will likely determine the market’s trajectory for the second half of the year.

Have a safe and great 4th of July holiday weekend.

~George

Market Commentary

Yet Another Record Month!

George MahfouzJune 1, 20262 min read

It’s hard for me to believe that I am writing again about another record month in the stock market! This time it not just the Nasdaq Composite (see chart here) and the S&P 500 (see chart here). Last week the Dow Jones Industrial Average (see chart here) and the small-cap Russell 2000 (see chart here) also set all-time highs! What in the world is going on? Especially with the world we are currently living in. The most sophisticated minds on Wall Street are also having a hard time understanding the markets today.

Let’s start with the war, oil prices and inflation. This is a triple whammy to the economy and to future economic growth. So how is it all four major averages set records this week? Sure, the A.I. trade continues to attract investment from around the globe and one can argue that this ilk that continues to lead the charge. In fact, it’s a fact! This is where I have concern. There is such a large concentration of A.I. stocks or A.I. related stocks that are responsible for these ongoing record highs. If it wasn’t for the substantial gains in A.I. stocks both the S&P 500 and the Nasdaq Composite would barely be up on the year. I don’t know about you, but this does not feel right to me. My preference would be a broad-based rallying generating record highs versus once particular sector.

As the war in Iran continues and as inflation is nearing 4%, I think it is safe to say we are due for a pullback in stocks. Both the Nasdaq Composite (see chart here) and the S&P 500 (see chart here) have entered into overbought territory according to the Relative Strength Index (RSI) principles. If you are long the market, consult with your financial advisor to see if you should be making any adjustments to your portfolio. If you are considering entering the market, again consult with your financial advisor before you enter or add on to any new positions.

Good luck to all 🙂

~George

Market Commentary

Wait A Minute!

George MahfouzMay 1, 20262 min read

Now wait a minute! Oil prices are spiking, inflation is hot, the job market not so hot, and the Federal Reserve did not cut rates this week. With all of this negative news hitting the tape, both the S&P 500 (see chart here) and the Nasdaq Composite (see chart here) hit all-time highs. How in the world is this possible? Today the S&P 500 hit an all time high of 7,272.52 while the Nasdaq Composite hit 25,223.12. The small-cap Russell 2000 (see chart here) is also flirting with its all-time high while the Dow Jones Industrial Average (see chart here) has more work to do before it gets to its all-time high.

Breathtaking right? How counterintuitive is this as the recent headlines have not only had much of a negative effect on the markets, but records are being set in the top two indexes. It is a head scratcher indeed. One can say that corporate earnings have come in to support the strength in the markets, but I have seen a mixed bag in the Q1 earnings reports so far. Yes, select tech companies continue to outperform but many other sectors such as consumer stocks have demonstrated some weakness. Whatever the case is, there is an old saying on Wall Street and that is “don’t fight the tape”!

As I look at the technical shape of the market we are seeing some overbought conditions. For example, both the S&P 500 (see chart here) and the Nasdaq Composite (see chart here) have both crossed the 70-value of the Relative Strength Index aka the (RSI). Typically, when stocks or indexes crossover the 70 value level it begins to enter overbought territory. Now many times RSI levels can go extreme and go as high as 80 and even the 90+ value level, which is possible here. I am not really expecting things to get that overbought especially with the current geopolitical backdrop but seemingly anything goes in this market.

Good luck to all 🙂

~George

Market Commentary

Breathtaking Volatility!

George MahfouzApril 1, 20262 min read

Breathtaking volatility has stormed the markets, especially since the war began. The currently vol has produced 1000 point swings in the Dow Jones Industrial Average (see chart here), this while the Nasdaq Composite soared over 750 points yesterday (see chart here). A 750-point day in the Nasdaq Composite is rare. The S&P 500 (see chart here) also has been whipped sawed as of late, while the small-cap Russell 2000 (see chart here) broke its 200-day moving average (click here) on Monday but reclaimed it the very next day. Remember the 200-day moving average is considered a major support line and no one who is long the market wants to see that support line fail.

In March, the key indexes also entered into correction territory by dropping over 10 percent from their all-time highs that were put in earlier in the year. A 10 percent drawdown is considered a “correction” while a 20 percent or more draw down is considered the beginning of a bear market. Luckily for the longs, the bleeding stopped in the 10 percent zone. So how did the selling pressure stop? The simple answer is our government came out and stated that they anticipate pulling out of the war in Iran in the next few weeks or so. Then after yesterday’s rally off the lows in the after-hours session the White House announced that the President is going to address the nation tonight regarding the war. This was enough for the rally to continue today as all the major averages added on to the gains made over the past two sessions.

So where do we go from here? I think a lot depends on what is said in tonight’s address to the nation and then how much investors believe what is said. In a geo-political crisis, investors and especially fund managers understand that things can change on a dime. What I hope for is concrete evidence that a cease fire will occur and that the healing can begin. In the meantime, I am remaining cautious until all the smoke clears.

Good luck to all 🙂

~George

Market Commentary

Hot Inflation Number Spooks Markets!

George MahfouzMarch 1, 20262 min read

On Friday stocks took it on the chin as a hot inflation number spooked the markets! The latest producer price index report which measures wholesale inflation came in on Friday much higher than expected (click here). This was enough to send the Dow Jones Industrial Average (see chart here) down over 500 points on Friday, while the S&P 500 (see chart here) pulled back 30 points. The Nasdaq Composite (see chart here) also fell sharply giving up 210 points and the small-cap Russell 2000 (see chart here) settled down 45 points to close out the month February.

So why the negative tape? Inflation is one of the two pillars in the Federal Reserve’s dual mandate on interest rates. The Fed has made it clear that it will not lower interest rates should inflation continue to rise. This hot inflation number is not what investors wanted to see hence the sell-off in the markets on Friday. The other pillar in the Fed’s mandate is a strong job market. Well, here is the catch 22, the job market has been obliterated over the past year and this calls for the Fed to lower rates to stimulate job growth. Rates have been lowered over the past few months, but the Fed also made it clear that no more interest rate cuts will occur until inflation gets under control. Not an easy backdrop for the Fed to navigate.

As I look at the technical shape of the market, I am a bit concerned here in the short term. Friday’s selloff was enough to send the major averages below their 50-day moving averages. What’s more with Iran being bombed over the weekend and a new war being started this will create even more volatility which will most likely send stocks even lower. There are some supports zones including the 200-day moving averages of the indexes, albeit the 200-day M/A’s on the averages are much lower. What I have learned over the years is patience over panic while having protective stops in place (click here).

Good luck to all 🙂

~George

Market Commentary

A Strong Start!

George MahfouzFebruary 1, 20262 min read

The stock market had a strong start to the year; however, the back half of the month was more volatile and capped the monthly gains. Out of the major averages, the small-cap Russell 2000 (see chart here) was the clear winner gaining over 5% in January. The Dow Jones Industrial Average (see chart here) advanced 1% while the S&P 500 (see chart here) eked out a 1/2 percent gain, however, the Nasdaq Composite (see chart here) closed the month with a slight loss.

I am not sure what to make of the markets here in 2026. From gold and silver going parabolic then subsequently crashing (click here) to Bitcoin losing over 30% from its all-time high, to the bond market trying to find its footing! It’s no wonder volatility began to spike as January ended. Pundits are pointing to the geo-political risks that are seemingly hitting the headlines daily, to our own country’s divisions that are increasing on the daily, to the Federal Reserve standing pat on interest rates and now ushering in a new Fed Chairman. How in the world can any analyst have the proper visibility as to where the markets are headed this year.

One way to shuffle through all the noise is corporate earnings. We are in Q4 earnings reporting season and so far, we are seeing broad strength in company earnings. Of the S&P 500 companies that have already reported their Q4 results, we are seeing double digit year over year growth which is a metric that investors can rely on. What I am cautious about in the short-term is the unpredictability of foreign and domestic policies. From one day to the next you never know what is going to come out. However, what impresses me is the absolute resiliency of the stock market. Recently have witnessed an invasion, threats of war, increasing domestic infighting, the Federal Reserve forthcoming changing of the guard and yet the markets remain near all-time highs!

Let’s hope soon that the political and economic backdrop comes together sooner rather than later so we can have more clarity as to how the rest of the year for the stock market will turnout.

Good luck to all 🙂

~George

Market Commentary

Gold & Silver Stole The Show!

George MahfouzJanuary 1, 20262 min read

Despite the overall markets booking impressive gains in 2025, it was gold and silver that stole the show. Gold (see chart here) went up and eye-popping 65% last year, while silver (see chart here) booked an unbelievable 135% return in 2025. That’s right, 65% and 135% annual returns on these precious metals (click here) which also set all-time highs. This type of parabolic move in gold and silver has not been seen in decades.

The overall markets also posted double digit gains with the Dow Jones Industrial Average (see chart here) gaining over 13% on the year, the S&P 500 (see chart here) booked a 16% plus gain, the Nasdaq Composite (see chart here) gained 20% and the small-cap Russell 2000 (see chart here) closed the year up 12%.

Needless the say the bulls were very happy with how the markets fared last year. As we head into the new year, I am looking for a similar backdrop at least at it pertains to the overall markets. In December, not only did the Federal Reserve cut interest rates they moved from quantitative tightening (QT) to quantitative easing (QE). This move essentially is going to flood the system with liquidity and capital flow that will move into the markets over the course of time. I know we are near or at record highs but there is an old saying on Wall Street and that is “don’t fight the Fed”. Meaning, when the Federal Reserve begins to implement accommodative policies such as moving from “QT” to “QE” markets typically respond favorably.

Make no mistake there are still risks out there from the geo-political backdrop to the instability out of Washington D.C. Without question when this volatility comes in and it will, the markets will act accordingly. So as much as this bull market can still run, I expect dramatic selloffs along the way.

Wishing everyone a safe and most prosperous New Year 🙂

~George

Market Commentary

A Volatility Spike!

George MahfouzDecember 1, 20253 min read

A volatility spike in November spooked plenty of investors which sent the markets into a tailspin! Volatility (see chart here) woke up last month as the markets digested the constant news flow and fears of an A.I. bubble (click here). This fear also spilt over into the crypto space where we saw Bitcoin, Ethereum and other Altcoins crash as much as 35% last month. For crypto, this is not an unusual drawdown, many times over a 30 plus percent correction has occurred in this sector. What’s different this time was the fear mongering over an A.I. bubble which has been a daily occurrence. This dynamic sent the tech sector down as a whole while also dragging crypto coins and crypto related stocks with it.

What was good to see for the bulls last week was the rally that occurred during the Thanksgiving holiday shortened trading week. This rally which has provided some calm to the market has once again taken the S&P 500 (see chart here) close to its record high. I was just happy to see a short-term bottom seemingly put in from last month’s sell-off.

As we enter the final month of the year the question now on every investor or traders mind is “can the markets muster up a Santa Clause rally?” Each year this is what the bulls hope to see and that is a year-end rally that takes stocks higher. The case for a Santa rally can be made. First, we have the Federal Reserve Open Market Committee interest rate policy meeting coming up on December 9th & 10th. All eyes and ears will be on this meeting to see not only if the Fed will cut interest rates, but even more so, the messaging and tone that comes out of the meeting on future rate cuts. One could say it was the hawkish comments (click here) made by the Federal Reserve chairman Jerome Powell that spooked investors which then spooked the markets and spiked volatility. In the last Fed meeting Chairman Powell stated there was no assurance of a December rate cut and that they will rely on the economic data to provide the necessary guidance as to cut or not.

Suffice to say, the economic data coming out continues to favor a cut in December in which inflation seems to be at least pausing while the unemployment rate is going higher. These are the two key factors in whether the Fed will cut rates again in December.

Good luck to all 🙂

~George

Market Commentary

Not So Fast…

George MahfouzNovember 3, 20252 min read

Not so fast was the message that Jerome Powell signaled in last week’s Federal Reserve policy speech. Yes, the Federal Reserve cut the benchmark interest rate by 1/4 point to the 3.75-4.00 range which is what the market expected. However, after cutting the benchmark rate, Chairman Powell took to the podium (click here) and commented “there is no assurance that a December rate cut would occur” which immediately sent the stocks and the crypto market lower. Investors were caught off guard that the Chairman guided in this manner. In fairness to the Powell’s updated guidance, he also stated that because of the government shutdown there are no government economic data reports being released for the Fed to base any future decision on further interest rate cuts which makes sense.

What makes more sense is that Congress comes together now to reopen the government for all the reasons we know, including the restart of key economic reports that are issued by the government. How in the world can the Federal Reserve base policy decisions when they do not get the data they need from the government to assess the current state of the economy? Investing and making investment decisions is already a complex process and the last thing we need is the leadership of this country to make it even more complex. Let’s hope Congress can come together sooner than later and reopen the government.

The good news is that the Fed did cut rates last week and this should bode well for the equity and crypto markets. Couple this with a better-than-expected Q3 earnings reporting season from corporate America and we should rally into year-end, especially if the government reopens. There are other factors at play such as coming to an agreement with China on trade and continuation of corporate earnings growth. Should all these factors align, then I would not be surprised to see a year-end rally.

Of course there is no guarantee that everything will align by year-end but despite the current uncertainties that we face what is impressive to me is that the Dow Jones Industrial Average (see chart here) the S&P 500 (see chart here), the Nasdaq Composite (see chart here) and the small-cap Russell 2000 (see chart here) are still trading near all-time highs.

Good luck to all 🙂

~George